* UBS AG became the second bank to settle accusations that it tried to rig benchmark interest rates, agreeing to pay roughly $1.5 billion in a deal with authorities in multiple countries.

* Google Inc received positive signals from the European Union about prospects for an antitrust settlement next year, but U.S. regulators have decided they need more time to complete their own probe of the Internet giant.

* Samsung Electronics Co Ltd said it would drop its injunction applications against Apple Inc in five European countries, in a major U-turn in a long-running patents war between the electronics giants.

* Facebook Inc's Instagram was caught in an Internet uproar on Tuesday over new terms of use for its photo-sharing service. After hours of irate customer reaction, Instagram clarified its approach, saying that it would not - as users feared - sell photos or use them in advertising.

* Knight Capital Group Inc agreed to pursue a merger with Getco LLC, a deal that would give the high-speed trading firm control of Knight's profitable business of processing trades for small investors, people involved in the discussions said.

* The Justice Department said it has reached a settlement with Pearson Plc's Penguin Group (USA) in its antitrust probe of e-book pricing, clearing away an issue in advance of Penguin's planned combination with Bertelsmann SE & Co's Random House publishing unit.

* Cable operator Time Warner Cable Inc said it would drop arts TV channel Ovation from its lineup on Dec. 31, the first such move since Chief Executive Glenn Britt warned earlier this month that it would begin dropping channels that "cost too much relative to the value of the service."

* The U.S. Department of Transportation said that Toyota Motor Corp agreed to pay $17.35 million in civil fines for failing to report safety defects to regulators within five days as required by law.

* LVMH Moët Hennessy Louis Vuitton SA named company veteran Michael Burke to lead Louis Vuitton, a surprising management shake-up at a vulnerable time for the world's biggest luxury brand.

* Despite progress toward agreement on a budget deal with the White House, House Republican leaders proposed a backup plan to prevent most Americans from facing an income-tax increase if negotiations collapse

FT

GREEK BOND BET PAYS OFF FOR HEDGE FUND

One of the world's most prominent hedge funds is sitting on a $500 million profit after making a bet that Greece would not be forced to leave the euro zone.

GOVERNMENT TO MAKE IT EASIER TO FIRE STAFF

The 90-day consultation period before large-scale redundancies can take place is to be halved to 45 days from next April.

SAMSUNG ENDS FIGHT WITH APPLE IN EUROPE

Samsung has said it will no longer seek an injunction against Apple's devices in Europe.

SANTS SECURES 3 MLN POUNDS PACKAGE AT BARCLAYS

Hector Sants will receive a total remuneration package worth as much as 3 million pounds ($4.87 million) as part of his move to Barclays next month.

INSTAGRAM SPARKS BACKLASH OVER PRIVACY

Instagram is facing a backlash from users after the rapidly growing photo-sharing app owned by Facebook altered its privacy policy to allow advertisers to buy users' photos.

GOOGLE CLOSES IN ON SETTLEMENT WITH EU

Google is edging closer to a settlement with the EU's top competition authority after Brussels said the U.S. search giant had made substantial progress.

BOEHNER PREPARES US FISCAL BACK-UP PLAN

John Boehner, the Republican Speaker of the House of Representatives, said he was preparing a back-up plan to extend current tax rates for all Americans except millionaires.

GEITHNER WAS TOLD OF LIBOR FEARS IN 2008

The Fed was warned as early as mid-2008 that banks may have been misreporting their Libor borrowing rate to aid their own trading positions, much earlier than previously known.

NYT

* The Federal Trade Commission is unlikely to finish until January its investigation into whether Google Inc abused its power in the search market, people briefed on the investigation said.

* Facebook Inc responded to the anger over the proposed Instagram changes. Kevin Systrom, a co-founder of Instagram, wrote a blog post saying the company would change the new terms of service to make clearer what would happen to users' pictures.

* Nielsen Holdings NV said that it had agreed to acquire Arbitron Inc, the radio ratings company, for $1.26 billion.

* Penguin, trying to ensure a clean slate before its planned merger with Random House, announced that it was settling a lawsuit brought by the Justice Department over the pricing of e-books.

* Private equity firm Cerberus Capital Management said that it would immediately sell its controlling stake in Freedom Group, the gun maker that made the rifle used in the Connecticut school shootings.

* Jefferies Group Inc said that it earned about $71.6 million in profit for the fourth quarter, up 48 percent from the same time a year ago as its core businesses showed marked improvement.

* House Republican leaders struggled to rally their colleagues around a backup measure to ease the sting of a looming fiscal crisis by allowing tax rates to rise only on incomes over $1 million.

* The Federal Trade Commission said that it had opened an inquiry into the practices of nine companies that collect and resell or analyze consumer data.

* Seven weeks after Hurricane Sandy dumped an estimated 500 million gallons of water in Hoboken, crippling its transportation network and leaving tens of thousands of commuters casting about for alternative modes of travel, officials said that PATH train service was at last set to resume.

* Joseph Lhota, the chairman of the Metropolitan Transportation Authority of New York, has informed the Cuomo administration that he is stepping down from his position, according to four people with direct knowledge of his plans. He is expected to resign on Friday, allowing him to pursue a candidacy for New York City mayor as a Republican.

CANADA

THE GLOBE AND MAIL

* The White House signaled its support for a renewed federal ban on assault weapons on Tuesday, as the National Rifle Association and top Senate Republican expressed openness towards measures aimed at preventing a repetition of the Newtown massacre.

Reports in the business section:

* U.S. Republicans tried to squeeze more concessions from the White House on taxes on Tuesday in political maneuvering for a deal that would prevent the U.S. economy from going over the "fiscal cliff" in the new year.

* Canada has implemented new rules requiring airlines to advertise the actual bottom line ticket price -- including all taxes, charges and fees. Print advertising, billboards and online ads will also note the cost of those taxes and fees included in the actual airfare.

NATIONAL POST

* The Harper government has approved funding for Canada's world-beating surveillance satellite program, just as it seemed that it may become the victim of spending cutbacks.

FINANCIAL POST

* Porter Airlines Inc said on Tuesday that it would be entering the packaged vacation market with the launch of Porter Escapes. The new offering from the Toronto Island-based airline will include flight and hotel bundles for all 19 of its destinations.

CHINA

PEOPLE'S DAILY

--The Ministry of Land and Resources said it will maintain and improve policies designed to contain housing and land prices, with focus on cities that have experienced either year-on-year growth or month-on-month growth for three straight months.

CHINA SECURITIES JOURNAL

--An op-ed from the research centre of the State-owned Assets Supervision and Administration Commission (SASAC), which manages the central government's equity stakes in China's largest state-owned enterprises, says that China should recognise the potential of investment by private equity funds to spur technological innovation.

--Income distribution reform must address the gap between the rich and the poor, the government-backed Chinese Academy of Social Sciences (CASS) said in its 2013 "Society Blue Book". CASS emphasised that merely increasing average incomes, without addressing this gap, is not sufficient.

--China is studying policies to support the photovoltaic cell industry, amid a trade dispute with the United States and the European Union, said Shen Danyang, spokesman for the Ministry of Commerce of China.

CHINA BUSINESS NEWS

--The China Banking Regulatory Commission (CBRC) is considering ways to increase supervision of the country's rapidly growing but lightly regulated trust sector. In order to gain a clearer picture of who invests in trusts, CBRC is considering a proposal that requires trusts to submit a list of all its investors, including their names, contact details and their investment amount.

--An additional two million tourists are likely to visit Beijing in 2013 due to a new policy that allows visitors from 45 countries to spend 72 hours in the city without a visa, said Wang Yue, deputy director of the Beijing Tourism Development Committee.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Pioneer Southwest (PSE) upgraded to Neutral from Sell at UBSFidelity National (FNF) upgraded to Overweight from Equal Weight at BarclaysFirst American (FAF) upgraded to Overweight from Equal Weight at BarclaysSynaptics (SYNA) upgraded to Overweight from Neutral at JPMorganAccess Midstream Partners (ACMP) upgraded to Buy from Neutral at UBSStanCorp Financial (SFG) upgraded to Equal Weight from Underweight at EvercoreReinsurance Group (RGA) upgraded to Overweight from Equal Weight at EvercoreMorgan Stanley (MS) upgraded to Overweight from Equal Weight at EvercoreHuntington Bancshares (HBAN) upgraded to Overweight from Equal Weight at EvercoreAkzoNobel (AKZOY) upgraded to Neutral from Sell at CitigroupPanera Bread (PNRA) upgraded to Outperform from Neutral at Wedbush

Downgrades

H&R Block (HRB) downgraded to Neutral from Buy at Compass PointSandRidge Energy (SD) downgraded to Neutral from Buy at CitigroupChubb (CB) downgraded to Equal Weight from Overweight at Morgan StanleyPDC Energy (PDCE) downgraded to Hold from Buy at CanaccordAmerican Express (AXP) downgraded to Equal Weight from Overweight at EvercoreWells Fargo (WFC) downgraded to Equal Weight from Overweight at EvercoreBJ's Restaurants (BJRI) downgraded to Neutral from Outperform at Wedbush

Initiations

Antares Pharma (ATRS) initiated with a Buy at JefferiesBaidu (BIDU) initiated with a Sell at MaximC.R. Bard (BCR) initiated with an Outperform at JMP SecuritiesFirst Niagara (FNFG) initiated with a Neutral at GoldmanFlowserve (FLS) initiated with an Outperform at OppenheimerGreenway Medical (GWAY) initiated with a Market Perform at Wells FargoJarden (JAH) initiated with an Overweight at JPMorganM&T Bank (MTB) initiated with a Neutral at GoldmanMonro Muffler (MNRO) initiated with a Buy at Stifel NicolausOmnicell (OMCL) initiated with a Market Perform at Wells FargoOnyx Pharmaceuticals (ONXX) initiated with a Buy at UBSPACCAR (PCAR) initiated with a Hold at BB&TQuanta Services (PWR) initiated with a Buy at UBSTD Ameritrade (AMTD) initiated with an Outperform at William BlairTarget (TGT) initiated with a Hold at Stifel NicolausWhitestone REIT (WSR) initiated with a Neutral at RW Baird

The board of Knight Capital (KCG) will pursue a merger with Getco, with Getco planning to pay $3.75 per share for half of Knight's outstanding stock, according to a Wall Street Journal report that cites sources.Penguin Group, part of Pearson (PSO), has reached a settlement with the U.S. DOJ over allegations that it and other publishers conspired to raise e-book prices for consumers, reports the Wall Street Journal.The Federal Reserve Bank of New York was warned as early as mid-2008 in emails that banks may have been misreporting their Libor borrowing rate, the Financial Times reports.A federal judge yesterday questioned whether shareholders accusing private-equity firms including KKR (KKR), Blackstone (BX) and Bain Capital, of bid-rigging had enough evidence to proceed with most of their lawsuit, the New York Post reports.Facebook's (FB) terms of use policy changes to its Instagram site has drawn criticism and blacklash from consumers and privacy advocates, reports Bloomberg.

"* Private equity firm Cerberus Capital Management said that it would immediately sell its controlling stake in Freedom Group, the gun maker that made the rifle used in the Connecticut school shootings."

Private equity firm Cerberus has put U.S. firearms maker Freedom Group up for sale following Friday's killing of 20 children and 6 adults at the Sandy Hook school shooting in Connecticut.

Freedom Group includes Bushmaster, maker of the rifle used in the shooting at the schoolin Newtown. Cerberus bought Bushmaster in 2006 before adding another 10 makers of firearms, ammunition and accessories to the group.

It is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level. The debate essentially focuses on the balance between public safety and the scope of the Constitutional rights under the Second Amendment. As a Firm, we are investors, not statesmen or policy makers. Our role is to make investments on behalf of our clients who are comprised of the pension plans of firemen, teachers, policemen and other municipal workers and unions, endowments, and other institutions and individuals. It is not our role to take positions, or attempt to shape or influence the gun control policy debate. That is the job of our federal and state legislators.

There are, however, actions that we as a firm can take. Accordingly, we have determined to immediately engage in a formal process to sell our investment in Freedom Group. We will retain a financial advisor to design and execute a process to sell our interests in Freedom Group, and we will then return that capital to our investors. We believe that this decision allows us to meet our obligations to the investors whose interests we are entrusted to protect without being drawn into the national debate that is more properly pursued by those with the formal charter and public responsibility to do so.